Stale Thoughts and Broken Links

Old entries from my weblog on geophysics and the energy industry.


Last week I attended an all-day meeting at UH for the DOE National Lab projects titled "Testing Advanced Computational Tools for 3D Seismic Imaging" and "Next Generation Seismic Modeling and Imaging." I've posted my notes from the meeting. I'm still very interested in this project, but I haven't formed an opinion on what direction it should take next. If I have any coherent thoughts in the next month or so, I'll post them.


Oil and Gas Journal: What's happening in exploration.

The last item at the bottom of this column is titled "Magical startup." It gives some details of Mike Zeitlin's spin-off of Magic Earth from Texaco. Magic Earth is continuing development and marketing of Geoprobe, Texaco's high-end visualization and interpretation software.

Houston Chronicle: BP Amoco says emissions cuts viable.

"Breaking ranks with other major petrochemical companies, BP Amoco says its four area plants can basically comply with a state proposal for deep cuts in industrial emissions.

"BP official Tim Scruggs said this week that his company's four area plants can achieve a 90 percent reduction at the `vast majority' of their hundreds of individual pollution sources."

Maybe BP can give Exxon Mobil lessons on behaving like a responsible corporate citizen.


Slate: Crude Confusion.

"Unless the fabric of the universe has changed since I took Econ 101, the supply of oil and the price of oil are more closely related than either [Wall Street Journal columnist Paul] Gigot or [Energy Secretary Bill] Richardson implies. The reason we've seen the `fluctuations in price' that Gigot considers insufficient grounds for intervention is that there have been `supply problems,' which he deems sufficient grounds....

"The fact is that the Bush administration, like the Clinton administration, was responding to what Paul Gigot dismissively refers to as `fluctuations in prices.' On the day President Bush authorized the release -- 1.1 million barrels a day for a month, roughly the same as the Clinton administration's release -- the White House said its goal was `to promote stability in world markets.' Price stability? Supply stability? Yes."

O.K., now I've turned 180 degrees on this SPR thing.

Wall Street Journal: International Energy Agency Calls For Board Meeting on Oil Shortage.

"On Tuesday, Spanish Prime Minister Jose Maria Aznar met here with French President Jacques Chirac to press his case that members of the European Union should follow the U.S. example and release oil from stockpiles intended for use during supply disruptions....

"The IEA has proposed that its governing board -- comprising representatives of its 24 member countries in North America, Europe, Asia and the Pacific -- meet here Nov. 4 to jointly review the rapidly evolving oil-market situation."

Wall Street Journal: Despite Price Spike, Oil Firms Reduce Output, Exploration.

"Most major integrated oil companies, which raised production when prices were stable between 1995 and 1998 and then cut back drastically when prices fell in 1998, are expected to increase exploration and development spending by a modest 10% to 20% in the coming months."

I think the headline they ran over this story is misleading. It should have been something like, "In `old economy' oil industry, adjusting production levels to price swings takes time." And what's so "modest" about a 10-20% spending increase?


WSJ: The Outlook.

"Jose Angel Gurria, Mexico's finance minister, recalls that oil consumers weren't concerned about Mexico's plight when oil hit $8 a barrel. `No one was going around passing the sombrero then,' he says."

I really like that quote. But let's exercise a little restraint before we dust off our old "Let the bastards freeze in the dark" bumper stickers. Reading over the press releases at Oil Online, I can't help but notice that everyone (non-OPEC nationals, majors, and independents) is announcing double-digit production increases for 2000. I suspect the increase in oil supply will more than meet the current demand. And if the world economy slows again -- can you say "Asian Flu"? -- they might have to eat all that extra oil.

You know, maybe using the SPR to cool off the oil market wasn't such a bad idea after all.

Oil and Gas Journal: OECD: oil price could trigger economic slowdown.

"Nonetheless, OECD economists say an oil shock like that in the mid-1970s is `unlikely to have negative [economic] impacts of the same magnitude as on similar occasions in the past' for three reasons, not least of which is that the `average' OECD economy has greatly diminished its dependence on oil over the last 25 years.

"The OECD also takes courage from the fact that oil prices, in real terms, are `still below the levels recorded after the second oil shock at the end of the 1970s....'"

"`Oil futures suggest that oil prices would decline moderately from a fourth quarter 2000 peak, but stay above $30 through the first quarter 2000, before falling back gradually towards $27/bbl at the end of 2000,' said the OECD, noting that some market observers `take a more bearish stance.'"

Oil and Gas Journal: API says US refineries running at capacity.

"John Felmy, API's policy analysis and statistics director, ... said despite concern about low heating oil inventories for this time of year, `most heating oil supplied during the heating oil season -- in the range of 90% -- comes directly from refinery production to users, by-passing the inventory system.'"


Houston Chronicle: Worker shortage proves costly.

"While oil prices are close to 10-year highs and companies are flush with cash, the industry was closing offices and firing workers less than two years ago when prices were at historic lows. That's turned off potential employees, Morris said.

"`They're thinking it's a boom today, but in two or three years there'll be another hiccup and you'll be laying people off again,' he said." Duh!


Oil and Gas Journal: Gore urges SPR drawdown to combat high oil prices.

"The American Petroleum Institute said, `This country's current situation has been a long time coming, and it cannot be remedied overnight. The SPR was established by Congress to address supply disruptions. It was not intended, and should never be used, to manipulate prices.'


"API urged the administration to increase assistance to low and fixed-income consumers to heat their homes and said the US should consider drafting a comprehensive energy policy.

"David Nemtzow, president of the Alliance to Save Energy, said the administration should renew its focus on promoting energy efficiency.

"`The cause for the steep price increases is basic Economics 101 -- growth in demand is fast outstripping supply. We can easily and comfortably reduce demand and be less dependent on OPEC nations and oil companies by simply supporting and using energy-efficient technologies that are available in the marketplace today. The SPR is at best a short-term response.'"

Good Grief, Al, even Tom DeLay is getting to take some good shots at you over this. Do you think I like being on the same side of an arguement as Tom DeLay? It makes me sick to my stomach.

Paradigm posted its own version of the TGS-NOPEC press release:

Paradigm Selected For Major Gulf of Mexico Depth Imaging Project.

"The contract, signed today, calls for Paradigm to provide depth-imaging services for an area covering approximately 15,400 square kilometers in the Mississippi Canyon section of the Gulf of Mexico."


TGS-NOPEC Geophysical Company Announces World's Largest Non-Exclusive 3D Pre-Stack Depth Migration Project.

"TGS-NOPEC has contracted Paradigm Geophysical to perform the depth imaging work in their Houston processing center."


Oil and Gas Journal: Fitch IBCA remains cautious on oil field service sector outlook.

"Mergers and acquisitions receive high marks from Fitch, given the excess capacity in certain energy sectors such as offshore seismic contracting. Biang said he sees the need for capacity to be brought out of that sector, especially in terms of boats, referring to efforts by Houston-based Petroleum Geo-Services Inc. (PGS) and Veritas DGC Inc. to reduce capacity by drystacking vessels.

"Biang said the joint venture of Schlumberger's Geco-Prakla with Houston-based Baker Hughes Inc.'s Western Geophysical into a new business, Western GECO, is another positive step. Biang notes that Western Geophysical will likely be inclined to reduce capacity in order to improve rates for seismic data.

"Fitch said it expects this trend to reduce competition for seismic projects and prompt companies to retire more of their older vessels. Higher data prices, longer-term contracts for vessel exclusivity, and longer lead times for proprietary work also are expected.


"Instead of cutting their R&D budgets, offshore seismic companies such as PGS are finding other ways to reduce costs, such as raising the number of seismic recording streamers being towed behind each ship and improving their data acquisition techniques and equipment. Better 3D seismic acquisition techniques also allow for a faster, more thorough evaluation of geological features, bringing the chances that a successful well will be drilled from 1 in 10 to 1 in 3. And new 4D and 4C seismic acquisition techniques will improve surveys, help closely monitor reserves during production and increase production rates.

"These efforts also save on personnel costs, noted the analysts.


"Ironically, service companies could make themselves more vulnerable to commodity price risk by expanding their capacity with new drilling equipment or seismic crews to meet surging demand. Fitch said that, after oil prices sharply declined during 1998, companies like Schlumberger, Baker Hughes Western Atlas, and PGS were forced to scale back their capacity after expanding their fleets to meet high demand."


I finally finished posting my overview of seismic exploration.


Houston Chronicle: It's final: BP takes over Vastar.

"The Vastar name will be eliminated as a result of the combination. The combined company is also dropping `Amoco' from its name and will be known only as BP, with a new logo that features a sunburst design of yellow and lime green."


Slate: Who's Enjoying the Energy Crisis? Hint: It's not OPEC.

"As a reliable source of international tension and unrest, the Caspian Sea region may well turn out to be the new Middle East.... Not, again, that this will necessarily do the locals any good: Following the Nigerian model of development can't be the best medicine for regimes of dubious stability. Let's face it-oil is a curse for any country. Too bad we can't all use less of it."


Oz Yilmaz is leaving Paradigm, and I never even got to meet the guy! He sent out a company-wide email announcing his resignation this morning. I could be wrong, but it sounds like he's moving to academia:

"Albeit I shall devote much of my endevours to exploration seismology (10-100 Hz), I also wish to broaden my spectrum to earthquake seismology (1-10 Hz) on one hand and engineering seismology (100-1,000 Hz) on the other. Heretofore, I shall be pursuing my passion for the seismic method in Istanbul. I wish to extend my wholehearted best wishes to everyone at Paradigm."

World Oil: Fingerpointing backfires.

"House Speaker J. Dennis Hastert (R-Ill.) referred to the [internal DOE] memo while accusing [EPA Administrator Carol M.] Browner of misleading Congress, the media and the public.... `It is clear from the June 5th memo that the DOE, whose primary responsibility is oversight of our nation's energy supply, believed that a lack of gasoline inventories in the Midwest, as well as EPA regulations, were not only "factors" which led to higher gasoline prices, but in fact the primary causes,' he said in a letter to the EPA administrator. `Nowhere does this document indicate, or imply, that price gouging was a factor; nor has any other federal study or investigation. Yet, you continued to point the finger' in what appears to be a `coordinated strategy' with the White House to deflect blame, he said."

I must say I nailed the situation a couple of months ago. When you hear politicians blame "Big Oil" for the price of gasoline, they are lying, and they damn well know it. Anybody with half a brain knows it. William Howard Taft busted up "Big Oil" almost 90 years ago.

I'm not conducting a political vendetta against the Clinton administration; I plan to vote for Gore, and I hope he keeps most of the current administration in place. But this "Big Oil" crap isn't "just politics." It's irresponsible -- how are we ever going to have a reasonable energy policy in this country when our political leaders are blatantly lying about the facts of the situation?

That World Oil editorial concludes with a postscript quoting an anonymous email that's being passed around:

"There are a lot of folks who can't understand how we ran out of oil here in the U.S. Well, here's the answer: It's simple, nobody bothered to check the oil; didn't know we were getting low. And of course, the reason for that is geographical. Most of the oil is in Texas and Oklahoma, and all the dipsticks are in Washington, D.C."

I'm mad as hell, and I'm not going to take it anymore!


Baker Hughes and Schlumberger sign definitive agreement for creation of Western GECO.

"The transaction is expected to be completed before the end of the year and is subject to regulatory approvals.... Baker Hughes and Schlumberger would respectively own 30% and 70% of the venture..."

The Leading Edge: Whither geophysical technology? The views of the vendors.

Includes contributions from Landmark, GX Technology and 3DGeo.


Oil and Gas Journal: Shell spend hike raises North Sea sights but `no new boom'.

"The UK North Sea's slow-rolling recovery from the lowest activity levels in its history was today given a further shot in the arm by news from Shell Exploration & Production PLC that it plans to inject some $1.2 billion in to as many as half a dozen new developments in the province over the coming year.

"That Shell expects to double its spend on seismic surveys, along with enhanced investment in exploration drilling, was, according to [Shell Expro Managing Director Malcolm Brinded], `the best indicator of [his company's] confidence' in the future of the UK North Sea, though he emphasized the figure of $300 million `wasn't a firm promise because it depended on results'.

"`Advances in technology and greater well engineering efficiency are leading to improved international competitiveness for exploration funding,' he said. `And they are creating the opportunity to realize further value from the mature North Sea basin. We have to compete globally for investment, and the increase in expenditure is certainly a mark of confidence in the North Sea.'"

If TotalFinaElf is really committed to keeping its ridiculous name, can we at least start abbreviating it TFE?

Walter Kessinger

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